It may seem surprising that some forms of real estate have been among the most reliable of investments.

Real estate investment trusts, known as REITs, invest in and own properties such as shopping centers, apartments, offices and industrial facilities. Readily accessible investments, these are sold directly like stocks or through mutual funds and exchange-traded funds.

"The REIT market outperformed the broader equity index in 2011, and good employment growth numbers should help all sectors of the REIT market in 2012," said Brad Case, economist with the National Association of Real Estate Investment Trusts (NAREIT) in Washington, D.C.

Improved private-sector job growth has a positive effect on consumer behavior, Case pointed out, and people appear to be "done with hunkering down" and seem to feel better about spending. There is pent-up demand with young people moving out of parental homes into apartments and, in the process, boosting apartment REITs, he said. Any uptick in manufacturing and trade similarly will benefit industrial REITs.

Since REITs are structured to distribute at least 90 percent of their taxable income to shareholders, they provide high yields in addition to liquid participation in the real estate market. The New York Stock Exchange recently had 142 REITs with market capitalization of $386 billion, according to NAREIT. REITs paid out a total of about $18 billion in dividends in 2010, according to that association.

Some of the biggest REITs look attractive for investment.

For example, Simon Property Group Inc. (SPG), the nation's largest retail REIT, reported strong third-quarter results that indicated its tenants are holding up well despite obvious problems in the overall economy. It operates regional malls, premium outlet centers and international properties. The company recently owned or had an interest in nearly 400 properties with about 250 million square feet of space in North America, Europe and Asia. Expansion of malls around the world positions the company for future acquisitions.

"Income production is a fundamental reason why REITs have done relatively better than was expected," explained Jeff Tjornehoj, senior research analyst with Lipper Inc. in Denver. "Their dividend yields are good, and investors love income in times of uncertainty, making REITs very attractive."

A low-interest-rate environment and unimpressive dividend production in the broader stock market have boosted the image of REITs, Tjornehoj said. The best-performing REIT sector during 2011 was the self-storage market, while the worst performing was lodging and resorts, he said.

"REITs are a capital-intensive business that took it on the chin a few years ago but have settled down since then," said Tjornehoj. "We did not see the collapse in the commercial real estate market that some people had feared, and those funds that invested in them look relatively strong right now."

It is noteworthy that there is little overlap between the REIT market and the overall housing market, he said. The typical REIT fund has almost no exposure to residential mortgages, with the only potential connection that of apartments and manufactured homes. Home foreclosures make apartment REITs more attractive, he said.

Another REIT example, Public Storage (PSA), is a self-storage giant whose size equals the next four competitors combined. It features geographic diversification and efficient operations that take advantage of its economies of scale. Most of its earnings come from the U.S. where it has more than 2,000 storage facilities with about 130 million square feet in 38 states.

The self-storage business is highly fragmented, fiercely competitive, employs short-term leases and has little product differentiation. To its credit, Public Storage funds its acquisitions with preferred equity or retained earnings rather than with debt.

"When it became apparent that the economy wasn't turning a corner, a lot of the REIT mutual funds moved into the blue-chip companies with strong balance sheets and a variety of assets," said Rob Wherry, mutual fund analyst with Morningstar Inc. in Chicago. "These buoyed a lot of the REIT funds in the first half and helped them weather the summer much better than the average equity fund."

An investor new to REITs and real estate funds would start best with investments replicating the broad REIT market, said Tjornehoj. Here are two he considers worth looking into:

-- iShares FTSE EPRA/NAREIT North America (IFNA), an exchange-traded fund with $12 million in assets, has 90 percent of its assets in U.S. real estate holdings and the rest in foreign holdings. At the top of its portfolio holdings of 160 REITs are Simon Property Group, Public Storage, Equity Residential, HCP Inc. and Ventas Inc. It gained more than 3.5 percent in 2011.

-- Vanguard REIT Index Fund (VGSIX), a mutual fund with $19 billion in assets, tracks the MSCI U.S. REIT Index, a benchmark of more than 100 securities focused on malls, apartments, office space and storage centers. With a portfolio similar to iShares FTSE EPRA/NAREIT North America, this fund that requires a $3,000 minimum initial investment provided a total return of more than 3.5 percent in 2011.

Despite all of their positives, REITs should only constitute a portion of an investor's individual portfolio because they do move in cycles.

"A neophyte investor couldn't go wrong with either of those two investments," concluded Tjornehoj. "But while they offer some diversification, they are nonetheless volatile in comparison to a much broader equity allocation."